There is little question among those who can still bring objectivity to bear that American capitalism has reached a moment where the system, as initially intended and practiced, has been perverted almost beyond recognition.

How do we know this?

Allow me to use my favorite example.

When Walmart –the largest corporation both in America and the world when measured by revenue and employee count -relies heavily upon the American taxpayer to provide food stamps, housing assistance and Medicaid coverage to its employees, I think it fair to say that something has gone seriously awry in American capitalism.

While it is not my inclination to count anyone else’s money, and I certainly cheer for our companies to reach great levels of success, it seems reasonable to point out that Walmart reported net income in 2018 of just under $10 billion. And let’s not forget that
Walmart will save roughly $2 billion each and every year in taxes thanks to the 2017 tax reform law.

If ever anyone was in a position to honor the basic benefits of capitalism, I think it fair to say that Walmart is in such a position.

As things currently stand, approximately 50 percent of Walmart’s workforce are part-time workers. That is up from 20 percent in 2005.


Because Walmart figured out that they could avoid a great many obligations to workers if they keep them working on a part-time basis.

The best example of these benefits to the company, and a primary motivator of their movement to a heavy part-time work force, was the impetus provided by the Affordable Care Act. Walmart quickly determined that by keeping worker hours under 30 per week, they could avoid the responsibility to provide so many of their employees the health care benefits Obamacare sought to accomplish for these workers.

And there are other benefits to Walmart and its shareholders.

Walmart has computed that they can get away with this low pay because the American taxpayer is required to step in and allow Walmart to get the benefit of the services of these employees, critical to the company maintaining its strong profit position, and make up the shortfall in their earnings by allowing you and I to pay for food stamps, housing subsidies and Medicaid without ever spending one penny in a Walmart store.

To increase the irony, where do you think these food stamp recipients spend this taxpayer provided necessity?

At Walmart, of course!

According to The Huffington Post;

“Americans spend about 18 percent of all food stamp dollars at Walmart, according to company estimates told to the Wall Street Journal and confirmed by The Huffington Post. That’s about $14 billion of the $80 billion Congress set aside for food stamps last year.”

Pretty slick, no?

It continues.

Since these 50 percent of the employee base don’t earn enough to afford health care insurance for themselves or their families, Walmart generously provides counselors to help these folks navigate the Medicaid system so healthcare can be available to these folks curtesy of the American taxpayer.

I know what some of you are thinking- if these people are only working part time at Walmart, why not fill in the hours by working at a second job? That is, after all, the American way.

Sadly, this is not as easy to do as you might think-and the difficulty of obtaining that second job is very much by design.

Walmart tends to set their part timers schedules at 30 hours per week, leaving fewer hours for employees to give another employer the hours they need. It is easier for those potential employers to hire someone who can make the commitment to being available when Walmart workers cannot.

This disincentives a second employer when it comes to a willingness to give that Walmart employee a second job.

Still worse, Walmart purposely sets part-time workers schedules in a manner that makes it very difficult for their part-time employees to accept other forms of employment. It seems Walmart doesn’t want their employees distracted by second jobs but isn’t willing to pay anywhere near enough to allow that worker to survive on just their Walmart hours.

I know there are those who like to point out that having some hours is better than having no hours. That’s true but hardly speaks to the real issue.

Then there is the bit about how these people are free to get better jobs elsewhere. That one always gets me.

If your job was limited to part-time work and prohibited you from earning enough to eat, do you think it might have already occurred to you to switch employers if the opportunity is there to do so?

Others like to say that these Walmart part-timers are in starting level positions and shouldn’t expect better, but have you ever heard of a business where fully half the workforce is in starting level positions?

Is this anyone’s idea of what American capitalism was intended to be?

The most basic thing a human being works for is the ability to eat. After that, comes having a roof over their head and then, of course, you want to be able to provide health care to the kids should one get sick.

And yet, thousands who go to work for Walmart succeed at none of the above when relying on what the retail behemoth pays them and finds themselves reliant on the American taxpayer to have enough to eat, a roof over their heads and healthcare for themselves and their families.

Again, does anyone believe that this was the way our capitalist system was intended to operate?

Wasn’t the point to provide a system that increased productivity and therefore profits which would then inure, in reasonable proportion, to the employer and the employee?

What we currently have is most assuredly what the man we like to call “The Father of Capitalism”, Adam Smith, had in mind when he wrote in The Wealth Of Nations;

“…the true measure of a nation’s wealth is not the size of its king’s treasury or the holdings of an affluent few but rather the wages of “the laboring poor.”

Smith additionally declared that it is “a matter of simple “equity” that “they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labor as to be themselves tolerably well fed, clothed, and lodged.”


What Smith never contemplated in his vision of capitalism is that it would be left to the state and the taxpayers to assume an employer’s responsibility to see to it that labor be “tolerably well fed, clothed and lodged” and yet, that is where we often find ourselves.

Of course, it is not just Walmart.

So, how did this happen in the capitalist bastion that was the United States of America?

In Part II of this series, we will examine how Milton Friedman and his Chicago School of Economics made it okay for American business to completely discount the most basic needs of labor. In Part III, we will examine how our perverted capitalism is directly responsible for opening the door to our current discussion of the rise of socialism in America and whether such a system could ever truly come to be a reality.

Follow Rick on Twitter @rickungar
Be sure to listen to the daily podcast, “The Pod Complex” hosted by Rick Ungar and available wherever you find high quality, informative podcasts.

Facebook Comments